Tax Exempt Insurance
Captive insurance provides a surprising substantial amount of benefits to when in the form of an offshore insurance company. An offshore captive insurance license entitles the bearer to the following benefits:
- Reduction in premiums
- Improved risk management
- offshore tax benefits – tax exemption
- Securing insurance coverage where it would otherwise be uneconomically unavailable
- Generation of tax-free offshore investment income
- Direct access to the re-insurance offshore market
According to Dominica’s Exempt Insurance Act, offshore exempt insurance business is the insurance business of a company:
- whose risks and premiums originate outside Dominica; and
- on whose liquidation monies payable to shareholders are payable to or for the benefit of persons resident outside Dominica.
The benefits of establishing an offshore captive insurance company under the Exempt Insurance Act include the following:
- Exemption from all taxes including income tax and withholding taxes
- Exemption from exchange control requirements
- Reasonable capital requirement (US$100,000.00)
- Strict confidentiality for offshore asset protection
- Special Income Tax and Exchange Control exemptions for certain employees
- Reasonable Government annual fee (US$2,500.00)
- Offshore Financial privacy – No requirement to publish financial information
- Reasonable solvency requirements
- Modern and practical offshore company laws (modelled on the Canada Business Corporation Act)
- Meetings need not be held in Dominica
In order to obtain an offshore exempt or captive insurance licence in Dominica, the following requirements must be satisfied.
- Provision of an outline business plan
- Incorporation of a local company which will be the applicant
- The company must have at least two directors, one of which must be a citizen of Dominica resident in Dominica
- The company must have a minimum paid up capital of US$100,000.00. An irrevocable letter of credit suffices.
- Personal and financial information in respect of each shareholder, director and senior officer
- A registered office and resident representative in Dominica
The fees payable to the Government in respect of a licence are as follows:
- A registration fee of US$2,500.00. It is pro-rated in the year of registration and thereafter payable by 31st January in each year
- A processing fee of US$100.00
If you have any questions on the application for an exempt insurance licence or the operation of such an insurance in Dominica, please feel free to contact us.